The future is bright for fintech. At least, that’s the conclusion reached at a roundtable recently conducted by Harvey Nash Ireland on the topic.
Harvey Nash technology director Gavin Fox led the event and brought together a number of the country’s leading retail banks and fintech companies to discuss the opportunities, challenges and most exciting technologies impacting banking.
Open and collaborative
Despite adding to regulatory pressures, the introduction of PSD2 and open banking is seen as hugely positive for fintechs, consumers and those incumbent banks that embrace it. The future is no longer about disruption, but collaboration, with customer satisfaction at the centre.
Conor McAleavey, head of innovation at Leveris, said the combination of GDPR and PSD2 would “massively level the playing field” in the financial space.
The potential of levelling the playing field for progress was also noted by Nanna Saito Nielsen, director of banking operations at GoCardless. “We’re excited about the opportunities that regulation is opening up, which will help us to serve our merchants better and in more innovative ways. For example, open banking standards will make possible new and more sophisticated ways of collecting bank-to-bank payments.”
Eddie Dillon, head of innovation at KBC, predicted that we will see much more collaboration between banks and fintechs, creating a positive outcome for all parties and users alike. “Approached in the right way, it benefits everyone,” he said. We will see a future where different parties will compete in certain areas but cooperate in others.”
Rónán Gallagher, chief product officer at Alpha Fintech, coined the term ‘co-opetition’ to describe how the institutions working together would benefit all involved, as well as creating a healthy and varied market.
“Fintechs will not eat banks, but they may eat certain products or revenue streams of banks. However, banks have a legacy (both from technology and processes) and a wide customer base, making them an important distribution channel for fintechs.”
Rise of the commercial technologist
Tech professionals working in fintech should take note that commercial acumen and an understanding of the business goals they’re working towards are now a must. Innovation must be aligned with the commercial objectives of the business if it is to succeed.
Eoin Greene, CTO at CurrencyFair, said: “Innovation without results is an expensive waste of time, and can only be fostered in an environment lacking accountability and leadership. Innovation confined to an innovation team is another doomed attempt to transform a company into something that it isn’t.
“Ultimately, innovation is a culture and, in an organisation where innovation really thrives, innovation occurs organically through the way individuals and teams work together.”
To embed such a culture, fintechs need to take action at the recruiting stage, claimed Fox. “The days of the headphones-on, keyboard-bashing coder are gone. Businesses need to look at applicants’ soft skills just as much as their technical abilities, if they want to stay ahead.
“Does this person understand what we’re trying to achieve here? Can they work with other departments to bring an idea to fruition? These are the questions you need to ask at the outset.”
Gallagher explained how Alpha Fintech ensures business goals are kept in mind: “It is very easy when designing a new product to get lost in a cycle of improvement for improvement’s sake.
“Alpha looks to have a balanced approach where we are mindful of MVP or lean strategies, and look to introduce products or features incrementally where each can deliver a realisable benefit, whether that is increased revenue or additional customer acquisition.”
AI will make a major impact
While a host of technologies, including blockchain, big data and augmented reality, will have an impact on the industry in the coming months and years, artificial intelligence (AI) is expected to be the real game-changer.
As McAleavey pointed out, “AI will have the most disproportionate effect on banking in the short to medium term. On a like-for-like basis, banks employ about three times as many people as technology companies do, and most of that fat can be attributed to the performance of largely manual processes.
“We are beginning to see the first stages of this shift with the use of bots in customer service, but eventually AI will permeate the entire technology stack, automating all those manual processes step by step. In terms of the technology S-curve, AI is most definitely in the later stages and the effect is going to be profound for almost every industry in the world, but for banking in particular.”
The implications of this are significant, said JB McCarthy, development director at UCC. He suggested that the legacy banking model of branches in every community will be severely threatened, as business continues to migrate online and away from costly face-to-face transactions.
With the changing demands of consumers, this may not necessarily be a bad thing. McCarthy concluded: “Today’s customers expect to be able to search, select and sign up for products and services online, without filling in a paper form and mailing it back or handing it in somewhere.”
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